Entrepreneur a person who takes the risks necessary to organize, manages a business, and receives the financial profits and non monetary rewards. An entrepreneurial person employed by a corporation and encouraged to be innovative and creative.
The entrepreneur, according to French economist J.B. Say, is a person who shifts economic resources out of an area of lower and into an area of higher productivity and yield. But Say’s definition does not tell is who this entrepreneur is. Some define the entrepreneur simply as one who starts his or her own new and small business. The man who opens a small pizza restaurant is in business, but is he an entrepreneur? He took a risk and did something, but did he shift resources or start the business? If the answer is yes, then he is considered an entrepreneur.
Many of the sharp, black and white contrasts between the entrepreneur and the professional have faded to a gray color. Formerly, professionals such as doctors, lawyers, dentists, teachers, and accountants were not supposed to be entrepreneurial, aggressive, or market oriented. They were “above” the market driven world. Entrepreneurs, on the other hand, were the mavericks of society. They were risk takers who aggressively sought to make something happen.
Entrepreneurs exhibit many different behaviors; searching for a specific personality pattern is very difficult. Some entrepreneurs are quiet, introverted, and analytical. On the other hand, some are brash, extroverted, and very emotional. Some qualities many of them share. Viewing change as the norm, entrepreneurs usually search for it, respond to it, and treat it as an opportunity. An entrepreneur such as Ray Kroc of McDonald’s is able to take resources and shift them to meet a need. Making the decision to shift resources works better if a person is creative, experienced, and confident.
What Do Entrepreneurs Do?
In a general sense, entrepreneurs create something new, something different. They search for change, respond to it, and exploit it.
Initially, an entrepreneur is engaged in assessing the potential for the entrepreneurial venture and then dealing with startup issues. In exploring the entrepreneurial context, entrepreneurs gather information, identify potential opportunities, and pinpoint possible competitive advantage. Then, armed with this information, the entrepreneur researches the ventures feasibility- uncovering business ideas, looking at competitors, and exploring financing options.
After looking at the potential of the proposed venture and assessing the likelihood of pursuing it successfully, the entrepreneur proceeds to plan the venture. Planning includes such activities as developing a viable organizational mission, exploring organizational culture issues, and creating a well thought out business plan. Once these planning issues have been resolved, the entrepreneur must look at organizing the venture, which involves choosing a legal form of business organization, addressing other legal issues such as patent or copyright searches, and coming up with an appropriate organizational design for structuring how work is going to be done.
Only after these start-up activities have been completed is the entrepreneur ready to actually launch the venture. Such a launch involves setting goals and strategies, and establishing the technology operations methods, marketing plans, information systems, financial accounting systems, and cash flow management systems. An important activity is managing the various processes that are part of every business; making decisions, establishing action plans, analyzing external and internal environments, measuring and evaluating performance, and making needed changes.
An enterprise need not be small or new to be entrepreneurial. An entrepreneur is a person with entrepreneurial characteristics who employed within a large corporation. Entrepreneurs are usually found in enterprises that encourage experimentation, tolerate failure, recognize success, and share the wealth. Entrepreneurship is not applicable only to profit making institutions. In health care, the traditional hospital which appeared in Vienna in the late 1700s has changed greatly.
The Growth Oriented Entrepreneur:
Why do entrepreneurs continue to emerge when significant risks. Time and energy are needed to be successful?
Researchers studying the entrepreneurial personality have made some interesting discoveries. Researcher Donald Sexton compared founders of high growth firms with founders of companies that exhibited little or no growth. High growth company founders apper to share a distinct cluster of personal characteristics.
Need for achievement: Growth oriented entrepreneurs have a high need for achievement. They need to succeed, to achieve, and to accomplish challenging tasks.
Low need to Conform: Growth oriented entrepreneurs listen, but they are able to ignore others advice.
Persistence: Growth oriented entrepreneurs are persistent, doggedly doing what is best for the business to succeed.
High Energy Level: The capacity for sustained effort requires a high energy level.
Risk taking Tendency: People with a high need for achievement tend to take risks. Growth oriented entrepreneurs believe so strongly in their ability to achieve that they do not see much possibility of failure. Thus they accept risk and find it motivating.
Risk of Entrepreneurship:
In lunching a business, the entrepreneur usually faces substantial business risk. Well over 3 million new businesses are started each year. The failure rate among these new ventures is disturbingly high.
Besides considerable business risk, entrepreneurs face significant financial risk, since they typically invest, most if not all- of their financial resources in the business. They may take a career risk by leaving a secure job for a venture with a highly uncertain future. They also incur family and social risks because the demands of starting and running a young business leave little time for attention to family and friends.
Nowhere is there a report listing the specific reasons why thousands of business fails each year. However experts, business practitioners, and consultants point again and again to three reasons.
First, people fail because they jump into a business too quickly. They plunge into a new venture hastily, without doing their home work. They don’t analyze their own strengths and weakness. Who am I? What do I want? What are my goals?
Second, Businesses also fail because they run out of money. If you cannot meet your payroll, you are out of business. Realistic planning for the money needed is critically important. Estimates of cash requirements are a top priority before starting the venture.
Third, failing to plan is an obvious mistake. A detailed business plan forces the entrepreneur to think ahead, to reflect, to decide on how to proceed. This business plan should be in writing.
Function of an Entrepreneur:
Economist Marshal says that, “Entrepreneur is Captain of Industry”. An entrepreneur which functions perform in entrepreneurship, that below mentioned:
- Establishment of Entrepreneurship
- Risk Bearing
- Searching for Economic Opportunities
- Economic Development
- Decision Making
- Management of Entrepreneurship
- Re-allocation of Resources and Creation of Resources
- Adaptation with the Changes
- Increase in Productivity